Gold (GC11 Futures) Mid Term Analysis - SHORT
Updated
Last week saw a lot of emotional buying of the market. While some short positions were not viable later in the week, there has now been a clear rejection from:
1) The higher zone mentioned prior:
2) The previous long term weekly H&S pattern mentioned back in August:
In terms of current price action, it seems that an inverse H&S pattern is forming on the daily. We can also see that in terms of the RSI - with tweaked values more suited for long term analysis - that the price is EXTREMELY overbought. Note on the chart that historically - when using my specific settings - that there is a high probability for a reversal.
In terms of the DXY, TECHNICALLY it is still BULLISH on the daily, and has been simply consolidating for the past few days. Please note this infographic:
The probability for a move down for Gold seems more likely. There are two scenarios:
1) A retrace to the first minor zone around 1973.5 - 1967, based on the Fibonacci retracement of the recent daily impulsive move. The bottom point starting from the low of Monday 16th, and the high point being Friday 20th.
2) A retrace to the purple zone, starting at 1940.5, extending down to 1921. This is based on the Fibonacci retracement of the recent weekly wave up:
.
Scenario 2 seems more like of the two, as it would be a logical place for the final shoulder to form in line with this analysis.
There are a variety of ways to approach an entry for this week:
1) Buy PUT options around this price. If you do not have access to this functionality because you are trading CFD's, look into using the broker "Avatrade". They feature short term options spanning a few days, and while they are as powerful as traditional options, it can shield you from some of the short term volatility.
2) Look for a breakout sell below the low of Fridays candle, that being 1983.7 on the Futures.
3) Look for to short the 0.618 retracement of Fridays candle.
4) Look to short near the top of Fridays wick, essentially forming a double top.
5) Wait for a confirmed flip of the 21 / 55 EMA's, and look for a short around a relevant pivot.
I will be opting for approach 1, as well as approach 3. Manage your risk accordingly.
Just as a final note: Please note, there will be times where losses will be taken, but if you are entering around historical areas of support / resistance, they will be extremely negligible compared to your overall profits. Aim for points, not pips. Also please keep in mind, it is good practice to take profit as a position runs. Taking some profit out after 5 to 10 points is not a bad thing.
I hope this analysis will help you for the week ahead. I will be posting more closer to time analysis throughout the week. The majority of my time will be spent either here OR in private chat, so if you have any questions, feel free to ask!
Good luck!
Disclaimer: This is not financial advice.
1) The higher zone mentioned prior:
2) The previous long term weekly H&S pattern mentioned back in August:
In terms of current price action, it seems that an inverse H&S pattern is forming on the daily. We can also see that in terms of the RSI - with tweaked values more suited for long term analysis - that the price is EXTREMELY overbought. Note on the chart that historically - when using my specific settings - that there is a high probability for a reversal.
In terms of the DXY, TECHNICALLY it is still BULLISH on the daily, and has been simply consolidating for the past few days. Please note this infographic:
The probability for a move down for Gold seems more likely. There are two scenarios:
1) A retrace to the first minor zone around 1973.5 - 1967, based on the Fibonacci retracement of the recent daily impulsive move. The bottom point starting from the low of Monday 16th, and the high point being Friday 20th.
2) A retrace to the purple zone, starting at 1940.5, extending down to 1921. This is based on the Fibonacci retracement of the recent weekly wave up:
Scenario 2 seems more like of the two, as it would be a logical place for the final shoulder to form in line with this analysis.
There are a variety of ways to approach an entry for this week:
1) Buy PUT options around this price. If you do not have access to this functionality because you are trading CFD's, look into using the broker "Avatrade". They feature short term options spanning a few days, and while they are as powerful as traditional options, it can shield you from some of the short term volatility.
2) Look for a breakout sell below the low of Fridays candle, that being 1983.7 on the Futures.
3) Look for to short the 0.618 retracement of Fridays candle.
4) Look to short near the top of Fridays wick, essentially forming a double top.
5) Wait for a confirmed flip of the 21 / 55 EMA's, and look for a short around a relevant pivot.
I will be opting for approach 1, as well as approach 3. Manage your risk accordingly.
Just as a final note: Please note, there will be times where losses will be taken, but if you are entering around historical areas of support / resistance, they will be extremely negligible compared to your overall profits. Aim for points, not pips. Also please keep in mind, it is good practice to take profit as a position runs. Taking some profit out after 5 to 10 points is not a bad thing.
I hope this analysis will help you for the week ahead. I will be posting more closer to time analysis throughout the week. The majority of my time will be spent either here OR in private chat, so if you have any questions, feel free to ask!
Good luck!
Disclaimer: This is not financial advice.
Note
Screenshot of the daily target: Note
Key note: Notice how the -0.27 fib of the weekly move would coincidently stop just below the next purple zone higher up on the chart? Interesting...Note
Inputting Fridays OHLC on PP Calculator: pivotpointcalculator.com/Gives us a N point of 1995.8, essentially where price stalled on Friday. I will be looking to buy short term PUT options on Avatrade at this price on sunday, ie a short option.
For those that are not aware, a short options gives you the right to buy or sell an asset, but not the obligation to execute. As I will be BUYING a put option (a short position), after paying my premium, that is the maximum defined risk of my trade, so: on the unlikely scenario that Gold pumped by 500 points, I would have only lost my premium fee.
This is not financial advice, but an insight into more advanced order execution...
Note
A breakout level is a level which - when broken - is likely to break down / up in very quick succession.I have identified two potential break out levels - based on futures prices - which are:
1) 1982.7
2) 1920.6
Note
Instant open down on Sunday open:It seems the market is waking up again
Note
Daily target 1 was essentially hit perfectly.I will re-assess in the morning.
Note
This is the benefit of using monthly zones. While there is the odd occasion where they fail, they are VERY reliable:Note
Trade closed manually
Going to long here instead. Will update in the morning
Disclaimer
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